2017 (6) TMI 73 - AT - Income Tax

Penalty u/s. 271(1)(c) - at the time of preparing the Return of Income, entry of Short Term Capital Gain are done in the Short Term Capital Gain on Shares instead of Short Term Capital Gain other than Shares - Held that - Intention of the assessee is not to hide any income and any particulars but there is Data Entry mistake done by the Tax Practitioner only that please note. The intention of the assessee is not to hide and / or avoid any particulars in his books accounts but is a genuine human mistake. There is no intention of the assessee to hide the tax and income and he doesn t get any benefit. He recorded all the accounting entries in his books as well as paid the tax as he is liable for. But due to the human mistake i.e. at the time of passing the accounting entries by an accountant and calculation mistake of Tax Practitioner at the time of calculating the tax. See Price Waterhouse Coopers (P.) Ltd. vs. Commissioner of Income Tax, Kolkata-I 2012 (9) TMI 775 - SUPREME COURT wherein held the calibre and expertise of the assessee has little or nothing to do with the inadvertent error. Absence of due care, in a case such as the present does not mean that the assessed is guilty of either furnishing inaccurate particulars or attempting to conceal its income. Imposition of penalty on the assessee is not justified - Decided in favor of assessee

Summary

Issues involved:
1. Levy of penalty under section 271(1)(c) of the Income Tax Act, 1961 for the Assessment Year 2011-12.

Detailed Analysis:
1. The appeal was against the penalty imposed by the Commissioner of Income Tax (Appeals)-VI, Ahmedabad, for furnishing inaccurate particulars of income under section 271(1)(c) of the Act. The assessee argued that the penalty of ?4,79,464 out of ?10,00,000 was confirmed erroneously.
2. The facts revealed that the assessment under section 143(3) of the Act was completed, determining total income at ?33,00,260, with penalty proceedings initiated for inaccurate particulars of income. The assessee contended that the discrepancies were due to genuine mistakes by the accountant and tax practitioner, not intentional concealment.
3. The assessee's submissions included references to judicial decisions emphasizing that penalty cannot be levied for genuine errors or where complete particulars were disclosed. However, the authorities found the explanations unconvincing and proceeded to impose the penalty based on discrepancies in Short Term Capital Gain (STCG) calculations.
4. It was observed that the STCG on the sale of land was incorrectly taxed at 15% instead of the applicable 30%. Additionally, the assessee failed to account for the transfer of 25% share in the property in the relevant assessment year, leading to an understatement of income and incorrect STCG calculation.
5. The appellate tribunal analyzed the case and concluded that the assessee furnished inaccurate particulars of income intentionally, as evidenced by the deliberate misreporting of tax rates and purchase costs. The tribunal applied Explanation 1 under section 271(1)(c) and upheld the penalty.
6. However, the tribunal referred to a Supreme Court judgment in a similar case where a bona fide mistake led to a penalty deletion. Relying on this precedent, the tribunal decided to delete the penalty imposed on the assessee.
7. Consequently, the tribunal allowed the appeal, overturning the penalty imposed by the authorities based on the principle of bona fide mistakes and the absence of intentional concealment or inaccurate reporting of income.

This comprehensive analysis outlines the key arguments, findings, and legal interpretations leading to the decision to delete the penalty in the case.